"Touch ID unavailable." message on iPhone 7 . AKA touch button cracked

I got "touch ID unavailable" message on my screen while I am charging my new iPhone 7 plus phone. After examination I noticed a barely visible hairline cracked on my touch button. I booked an earliest appointment from Menlo Park NJ Apple store. There was 5 days waiting period. Not bad:) I just set up digital home button (great feature) and waited. Meanwhile the crack got little more visible during 5 days.

I took my phone to genius bar on my appointment day and found out and they consider my situation a physical damage(?).

There is no way I can crack my home button stand alone. My phone is two months old and never dropped and it was in a case all time. There is not even one single scratch on my phone or on my case. I don't have kung fu grip either:)

Then I asked to talk manager . He came and told me something sharp in my pocket cracked the home button(?). Well boy.. this manager is genius for reason:) Frankly I was already upset that Apple doesn't have clear policy about this issue But he really made sure I left store more upset by speculating about what is happening in my front pocket. He really believes some mysterious object in my pocket cracked my concave down shaped button with a perfect pinch point hit and left no damage or scratch around. Perfect hitman style🙂

I paid $180 for something it wasn't my fault. That gave me ripped off feeling. I definitely believe there is a flaw with touch button design; at least in my own particular phone. There are a lot of complaints about this issue in every forums and Apple hasn't come up with clear policy how to handle this issue yet. Some store "genius" managers are adding fuel to fire.

Are you experiencing same issue?